Despite Fees, HARP can Save Homeowners Money

Making the Home Affordable Refinance Program Pay Off

Many homeowners still have not gotten their arms around all of the details of the Home Affordable Refinance Program (HARP). The federal program, which has helped more than two million homeowners, was slated to end in December of 2013, but has since been extended to September 30, 2017.

Can HARP help you? Yes, if you have been making all your mortgage payments (one late payment within the last 12 months is acceptable), have lost equity in your home's value, have a mortgage that is backed by Fannie Mae or Freddie Mac, and closed your mortgage prior to June 1, 2009. Most people save an average of $250 per month when they refinance through the HARP program. Despite this, a common question is: How much should I expect to pay in fees for a HARP loan?

"Like any loan evaluation, the refinance rate is contingent on the risk associated with your credit rating. Thus, a lower credit score can result in higher monthly fees," said Rob McKenney, who is a President's Club Mortgage Banker with Quicken Loans.

"HARP fees are going to vary based on county and state fees," McKenney said. "A decent amount of the fees are associated with the underwriting and processing costs, too."

Every refi is different based on the size of the loan. But once third-party fees are factored in, many homeowners are looking at a neighborhood of $2,000 to $2,500 in fees, said McKenney.

Eric Ziegler, who is a Senior Power Mortgage Banker with Quicken Loans, agreed with the fee range, saying it is not uncommon for him to see an average of $2,000 to $3,000 in fees for HARP refis. "But very basic math tells you that HARP is still a great way to go," said Ziegler. "The program has helped dig many people out of the rut they’ve been in for a while."

Another benefit of HARP is that for most Fannie Mae loans, the fees can be rolled into the loan, and 5% of the fees on a Freddie Mac loan can be rolled into the loan.

"People should realize that they can save money with HARP," Ziegler said. "Despite the fees, you can recover them in a year or so."